Luckily, a little relief is at hand. As of May, those that have filed their income tax returns will be starting to get bonus checks in the mail; $600 for an individual, $1,200 for a family (check www.irs.gov for details on eligibility and timing). So the question on everybody’s mind is: “What do I do with my new found money?”
If you ask the government, you spend it. All of it. After all, that is the point of an “economic stimulus” package: you give people money, which they go out and spend, which generates cashflow to numerous business that would otherwise go with out, which means more money they spend in turn on supplies, and staff, and taxes... you get the picture. However, unless you strongly feel it is your patriotic duty to blow through your upcoming $600 at Macy’s (or Target, depending on where you like to shop), we would encourage you to consider using this windfall as your very own, personal “economic stimulus” package...
So, if we accept that we are not going to do what GW and friends want us to do with our money (you rebel, you), what to do with it? We would suggest putting it into three distinct areas in your personal .
Debt Relief - $200. If $600 is the amount you end up with, then $200 of it should go to the credit cards. This should be on top of whatever amount you are paying them anyway, as it means the additional money will go straight to the knocking down the principle. Not only will this reduce your interest payment next time, but will feel great as well - something that is all to rare when it comes to money, but is none-the-less crucial to work our way out of tight financial situations.
Wealth Account - $200. This is one of the cores of the Artists’ Prosperity System, and is essential to any wealth building process. All a “Wealth Account” is is a high interest savings account which you use to build up money in until you are ready to invest with it. We think highly of ING for this (www.ingdirect.com), and they always offer highly competitive rates, but there are certainly plenty of other institutions that are just as good - they can easily be researched online. What I want to stress with this account, before we move on, is that it needs to be liquid (ie you can get your money in and out of it easily), and that it is not a savings account, or an emergency account, or a travel account (all of which can be great, but are separate from your wealth account). You only take many out of your wealth account to buy assets, namely things that either generate money for your or increase in value. Nothing else. Ever. Period. Have I made my point?
Treat Yourself - $200. OK, so blow through some of the money, and feel great about doing it! When else have you been given money to go out and spend? And it is for the good of the country! A real win win! So get out there and buy a new shirt, or that pair of shoes you have been coveting, or a couple of games for the Wii, totally guilt free. Reward is an essential part of building wealth, because it makes the discipline required in other financial areas significantly easier to bear. So treat yourself. You have, after all, just paid an extra $200 towards your debt, and started a high interest account (into which you will be putting money regularly, right?), so now is the time to spoil yourself a little.
And that is it. Nice and simple. Three areas into which to put your “free money” - and any other money that comes your way if you choose to. Some of you may, of course, want to put more into debt and your new wealth account than into a splurge for yourself, and that is fine. Just don’t take it out all together. As I said earlier, one of the keys to growing money is feeling good about it, so you really do need to reward yourself for having taken action on improving your finances. There are a number of places to go next but, if you really allocate your money into the three areas listed above, you have laid a great foundation for yourself, and taken a strong step down the road of financial security and prosperity.
Miata Edoga is a working actor and founder of , Inc, the company for actors and artists. She recently released , designed to give anyone who wants them the tools to take control of their money.